April 29 (Bloomberg) -- Swiss bank Pictet & Cie.’s water
fund is profiting from the Middle East’s need to buy the
technology to make more seawater drinkable as companies such as
Xylem Inc. and Danaher Corp. step up business in the region.

“The companies that we are invested in are doing more
business in the Middle East,” Hans-Peter Portner, manager of
the Pictet Asset Management SA’s fund, said in an interview in
Abu Dhabi. “They’re selling pumps, they’re selling membranes.
The region is definitely a growth market for water companies.”

Arid Middle Eastern states including the United Arab
Emirates, of which Abu Dhabi is the capital, rely on treatment
plants to remove salt from seawater to make it drinkable. The
region is estimated to need $900 billion in water infrastructure
investment through 2030, Portner said April 22. Saudi Arabia
spent $1.1 billion in 2012 on 128 water and sanitation contracts
in Riyadh, whose population reached about 5.2 million last year.

Pictet, the first asset management company to start such a
fund in 2000, invests in publicly traded companies in the $500
billion water industry. U.S. water technology companies Danaher,
Xylem and Roper are among the 10 biggest holdings in the 2.3
billion-euro fund, accounting for 6.7 percent of the total. It’s
gained about 10 percent this year, according to Bloomberg data.

Hurricane Sandy

Xylem, the ITT Corp. spinoff whose pumps helped clear New
York tunnels of floodwaters after Hurricane Sandy, said in
January that it was planning to expand its business in the
region by opening an office in Saudi Arabia. Danaher, which
makes microscopes in addition to water-treatment systems, opened
a regional headquarters in Dubai in 2011.

Saudi Arabia has a “very, very harsh environment” with
high evaporation, high population growth and high water demands,
Mohammed Al-Saud, deputy minister of water affairs for Saudi
Arabia’s Ministry of Water and Electricity, said April 23 at the
Global Water Intelligence conference in Seville, Spain.

The government plans to expand wastewater and water
infrastructure across the kingdom and improve the reuse of
treated wastewater for agriculture, including more greenhouse
farming, and developing rooftop agricultural plots, he said.

Masdar, the renewable energy company run by Abu Dhabi’s
government, said in January that it will begin a project to
desalinate water using power from renewable sources with the aim
of building a full-scale plant by 2020. The U.A.E. opened a 10
billion dirham ($2.7 billion) power and water plant, the
nation’s largest, and eight desalination units on April 8.

Saudi Plans

Saudi Arabia’s Minister of Water and Electricity said in
January that the government had allocated $6.4 billion for water
and sanitation projects in 2013. The country is the world’s
largest exporter of oil.

“Water is essential for the oil and gas industry,”
Alistair Wyness, group water expert at BP Plc in London, said at
the GWI meeting of industry executives in Spain. “It we don’t
have access to water, we can’t get the oil out of the ground.”

Still, shortages are forecast to spread to countries like
Algeria and Morocco by 2025 as the region still isn’t investing
enough in water infrastructure, capturing, treatment and
recycling, Portner said.

“You have a lot irrigation needs in the Middle East and
for that you don’t need drinking water, it’s a waste,” he said.
“If you want to play golf in the desert, you need to irrigate.
You don’t need to use drinking water.”